Thursday, March 30, 2017

Being the House Player at the Casino


Renaissance Technologies Founder James Simons

Robert Mercer's preference for right-wing politics seems to stand in stark contrast to the political views of his predecessors at Renaissance Technologies--James Harris Simons and Howard Lee Morgan, the co-founders in 1982 of the company originally designed to revive dying companies.

Although all three men were brilliant in the field of mathematics, unlike Mercer, Simons became a politically moderate-leaning mathematician. He entered MIT at the age of 15, studying under Warren Ambrose and I. M. Singer. Only 23 when he obtained his doctorate from the University of California at Berkley (Bert Kostant thesis adviser) in 1961, and taught at MIT and Harvard until 1964. As Vietnam heated up after JFK's assassination, Simons agreed to work for the Institute for Defense Analyses (IDA), run by Maxwell Taylor, who had been Kennedy's chairman of the Joint Chiefs of Staff. He told Congress in 2008 that he was a "code cracker for the NSA."

The story goes that Simons denounced Taylor's statement that the U.S. could win the Vietnam War in a letter to the New York Times, which  published it. He then told a reporter "his survival strategy was to stop working on IDA projects and spend all of his time on his own research, until the U.S. left Vietnam. Ultimately, for the first and only time in his life, Simons was fired." That was 1968, the same year he joined Stony Brook University in New York, collaborating with Shiing-Shen Chern. They created a geometric theory that crosses over into physics and the quantum field theory. 

Within ten years Simons had begun his finance career in 1976 by trading in currencies with his own money, and after two years he left the university. He created an investment fund called Limroy and a hedge fund called Monemetrics--both involved in odd transactions based in the Bahamas and British Virgin Islands, to which we will return later.

RenTec--from Geometry to Physics to Computer Analytics

Simons, possibly sensing a need to add computer analytics to his investment formula, set up Renaissance Technologies (RenTec) in 1982 with Howard Lee Morgan. Morgan served as president of Renaissance Tech from 1983 through 1989. He had graduated from City College of the City University of New York in 1965 and taught there while working on his doctorate,
awarded by Cornell in 1968. Dr. Morgan then relocated to Philadelphia, teaching first in the Department of decision sciences at Wharton School of Finance (from which Donald Trump had graduated the same year Morgan arrived), and then he was professor in computer and information sciences at Moore School of Electrical Engineering ("birthplace of the computer industry"), both colleges part of the University of Pennsylvania, which he left in 1985. 

After 1985 Morgan taught briefly at Cal Tech and also at Harvard Business School. According to his bio at Edge Foundation, "His research on user interface technology, and on optimization of computer networks led to his bringing the ARPAnet to Philadelphia in 1974. As a result of this early participation in the internet, he advised many corporate and government agencies on the uses of electronic and voice mail, implementing it throughout the Wharton School in the mid 1970s."

An early investment Simons made in 1979 involved his putting $350,000 into Proximity Technologies, a company set up by a young California mathematician who created a spell-checking application and other features for word processing. In 1984 Renaissance Technologies invested in the first liquid crystal display (LCD) developer, CrystalVision, which focused on the technology now used in today's flat screen computer monitors and television. 

RenTec also infused $6 million into Franklin Computer Corporation, which had reverse-engineered Apple technology and then designed compatible applications. The money thus rescued Franklin from bankruptcy after it lost a lawsuit for copyright infringement. They negotiated joint use patent-sharing agreements with Apple, then took Franklin public in 1985 and manufactured Ace 2000 computers, compatible with Apple software. The company also spun off Franklin Electronic Publishers, Inc., which made electronic Bibles. As of 2002 Simons was still a director of Franklin Electronic Publishers, as well as on the boards of Numar Corporation, Cylink Corporation, Segue Corporation, and Kentek Information Systems. He was also named as  "founder and director of the Sanford Group, an industrial holding company in South America." Two years earlier, it was reported, RenTec's Medallion Fund "made a killing in the volatile oil futures market," but a mortgage-backed derivatives fund he backed "in 1995 swooned after two fine years."

Speech Recognition in Quantitative Finance

Mercer at IBM
In 1984 the New York Times mentioned "Bob" Mercer as part of a team lead by Fred Jelinek of Briarcliff Manor, developers of an office computer which could recognize and display words spoken into it. Jelinek had left a full electrical engineering professorship at Cornell in 1972 to lead the team of physicists, electrical engineers and computer scientists, who accumulated data, which was "statistically analyzed to predict patterns in the ways words are used and pronounced.... The team's goal was continuous speech recognition in what experts in the field call ''real time.'' That is, team members worked to produce a machine that could process and immediately display sequences of words and sentences as they are normally spoken."

The article gave a brief biographical summary of Jelinek, who was Mercer's boss at IBM:
Mr. Jelinek came to the United States with his mother and sister in 1949, at the age of 17, having lost his father in a concentration camp. Although he had wanted to become a trial lawyer in Czechoslovakia, he now had to cope with a new language and decided to study electrical engineering. After completing the last six months of high school, he spent four years at City College in New York City, attending classes at night and working during the day to help support his family as a lab assistant for a small manufacturer of transformers for fluorescent lights. A turning point came for him when a group called the Mid-European Studies Center awarded him a full scholarship to the Massachusetts Institute of Technology. He remained at M.I.T. to pursue a doctorate in electrical engineering, becoming an instructor there as well as a lecturer at Harvard University. In the last year of his doctoral program at M.I.T. he audited courses taught by Noam Chomsky, the renowned linguist....
Scott Patterson, Quants: ...New Breed of Math Whizzes, 114
The continuous-speech recognition team, with Dr. Jelinek as manager, consists of four groups headed by Lalit Bahl and Bob Mercer, both of Yorktown Heights, Ken Davies of Croton and Gideon Shichman, who commutes from Manhattan.
More than one IBM official, including Mercer and Peter Brown would leave in 1993 to work for Renaissance Technologies, and Bahl would soon follow them. In time, according to Scott Patterson, author of The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, Mercer was known as the "big gun." Patterson quoted one of the analyst/ traders, a former cryptographer, who said speech recognition training (referred to by financial experts as "statistical arbitrage and quantitative finance") gave Renaissance's Medallion Fund enough of an advantage to liken it to "being the house player at a casino. You have a small edge on every bet, and you have to know how to handle that." (p. 115)

IBM clearly did not have the iron-clad non-compete employment contracts that Simons implemented at RenTec. When two RenTec physicists--Pavel Volfbeyn and Alexander Belopolsky--tried to leave their jobs for another hedge fund, RenTec wasted no time suing for intending to violate its trade secrets. The physicists alleged in a court pleading that they left RenTec because it engaged in illegal trades "involving swap transactions, which they describe[d] as 'a massive scam' ... [which] violated U.S. Securities and Exchange Commission and National Association of Securities Dealers rules governing short sales." To escape the lawsuit, Millenium managed by Israel Englander, the Defendant hedge fund which hired them, paid $20 million to RenTec and fired Volfbeyn and Belopolsky, who remained as defendants--a dire warning designed to prevent similar exits or accusations.

After the 2008 collapse of the housing market, Simons testified before Congress, citing his credentials and negating claims that had been made by the former employees. He explained what his company did as follows:
Renaissance, an SEC-registered Investment Adviser since 1998, manages what are termed quantitative funds -- funds whose trading is determined by mathematical formulas designed to predict market behavior. Individual trades are generated by computers, based on work continually developed by our researchers. Naturally, human beings carefully monitor the trade execution process, making sure that all parts of the system are behaving properly. We operate in only highly liquid, publicly listed securities, such as stocks, bonds, currencies, and commodities, and do this on exchanges throughout the world. This means, for example, that we do not trade in credit default swaps or collateralized debt obligations, neither of which satisfies the above criteria. In the stock trading of our Medallion Fund, we hold balanced portfolios in each country, i.e., portfolios very close to being equally long and short. Our trading models tend to buy stocks that are recently out favor and sell those recently in favor.
Simons retired in 2009, and Robert Mercer replaced him. A piece in 2009 for Zero Hedge--"Time To Revisit RenTec's Allegedly Illegal Dark Pool, Limit Order and Swap Transaction Strategies"--points toward Renaissance quantitative equity hedge funds as the ultimate in a banker's wet dream. Just as much of last century's science and technology spy gadgets and remote viewing experiments were designed to accomplish a sure-fire way to make money in the stock market, Renaissance now hires hundreds of geeky PhD's to do the same thing for its highly secretive funds. A Bloomberg Markets article called one of RenTec's funds "the commercial version of the Manhattan Project," because of its secrecy. The confidential oath that employees sign makes it impossible for them to ever work for anyone else.

The next segment will explore how Renaissance Technologies used its math wizards to make money--effectively monetizing mathematics by crossing over into the fields of marketing, advertising, and even politics.

Computational physics has become the new magic wealth-creating formula that philanthropists, prime ministers and even mobsters (like Felix Sater) now seek.


Wednesday, March 8, 2017

Remembering the Harken Money

Spectators of world political events, like the denizens of Plato's cave, are often unaware of what was really happening in what is now being referred to as "the deep state," as their attention is always drawn to the shadows moving across the cave's wall.


The deep state has been defined by one writer as the "unelected power structures" within the official state. I once referred to such power figures as vassals, those men in a feudal system who receive blessings from the ruler in power in return for rendering homage, fealty, and usually military service or its equivalent to a lord or other superior. Unlike feudal times, however, today it seems to be the vassal who gives the ruler his power within a democratic, without which the vassal could not prevent the loss of his own personal wealth. 

In order to exist, the deep state must have secrecy. The vassals who manipulate their appointed rulers can only operate as long as their strings are hidden from sight.

With this lesson in mind, this blog shares with its reader an excellent research article written in 1991 by investigative journalist David Armstrong, who also wrote a shorter summary of some of the events mentioned, which appeared the same year in the Texas Observer.



Z Magazine/November 1991

 GLOBAL ENTANGLEMENTS: 

THE POLITICAL ECONOMY OF A TEXAS OIL CO.

By David Armstrong

Transcribed by Nuriya Janss

A map of the Persian Gulf emirate of Bahrain dominates the lobby of Harken Energy Corporation's modest Grand Prairie, Texas headquarters.  It is a potent image, a totem of sorts to the tiny island nation and the vast mineral wealth Harken hopes to extract from its shores.

Despite the emphasis Harken places in this oil-rich sheikdom, however, a more appropriate corporate symbol might well be a map of the earth. For Harken is truly a global enterprise. Its interests and influence extend worldwide. Its financial ties to some of the richest and most powerful men on the planet belie the image of a struggling small oil company.

Among the many noteworthy figures associated with Harken are:
  • George W. Bush, eldest son of the president; 
  • the billionaire Bass brothers* of Fort Worth, Texas, who will finance Harken's Bahrain expedition; 
  • a South African tobacco, liquor, and natural resources magnate; and 
  • a prominent attorney with ties to former Philippine dictator Ferdinand Marcos.  
In addition, Harken has numerous ties to institutions involved in gun running, drug smuggling, foreign currency manipulation, the alleged looting of foreign treasuries, and the U.S. Central Intelligence Agency-assisted destabilization of the Australian government.  (See "Oil in the Family," Texas Observer, July 1991.) 
Texas Observer archives
While there is no evidence of wrongdoing on Harken's part, it is clear the company has benefited from these relationships. More importantly, Harken and its associates have repeatedly profited from American intervention in foreign affairs.  And it is here that the company's true significance becomes apparent: For if nothing else, Harken offers a fascinating case study in how U.S. foreign policy is shaped by (and for) multinational corporate interests.

HUMBLE BEGINNINGS

Harken began inauspiciously enough as a two-person venture headed by Phil Kendrick, Jr. and Harry L. Mulligan.  Kendrick and Mulligan (the Harry and Kendrick from whom the company derives its name) first met in the trenches of Wall Street while serving as account executives for the investment banking firm of White Weld & Co.  Kendrick had grown up in the oil field of Texas, where his father, Phil Sr., founded the Abilene-based Kendrick Oil Company in 1913.  After graduating from the University of Texas in 1950, young Kendrick joined the family business, and remained an active partner until selling the company during the oil bust of the mid-1960s.

Kendrick had oil in his blood, however, and always knew he'd return to the industry.  "I went to New York for the specific purpose of learning all I could [about finance] while the oil business was so dead and would be hopefully knowledgeable when the time was right for it to come back again," he told the Observer.  By 1973, he'd decided the time had come and called his friend Harry Mulligan to inform him of his decision.  "I told Mr. Mulligan I was going back in the oil business and he said, well, he was sick and tired of the brokerage business and could he go with me," Kendrick recalled.  "I said, 'If you want to, I'd be glad to have you.  I always need someone to help raise money.' "

Harken was incorporated in California July 18, 1973.  Its original offices were located in Pasadena, California and New Haven, Connecticut, where Kendrick and Mulligan had settled while working for White Weld & Co.  By the end of 1974, the company had relocated to Kendrick's native Abilene. Harken grew steadily, if slowly, over the next five years, adding employees and participating in the exploration of more than 300 wells, primarily in Texas and Oklahoma.  it was not until 1979, however, that the company's first truly big break came along.

BUYING THE FARM

Phil Kendrick's quest for oil knew virtually no bounds. While Harken continued sinking holes in the Oil Patch, Kendrick kept one eye on other prospects.  "I had always been interested in Australia and always intended to get into the Australia play," Kendrick said.  "I'd read and studied the Australian situation for numerous years....It's a very large, unexplored country with a lot of area to find oil and gas."

Before Harken, or any other company, could explore Down Under, however, there was one major obstacle to be overcome--the Australian government.  In 1972, the citizens of Australia elected a progressive Labour Party government for the first time in 23 years.  Under the leadership of Prime Minister Gough Whitlam, the new government launched an ambitious program of reforms unlike any the country had ever seen. As Mother Jones reported in 1984, "In its first 100 days in office, the new
Labour government recognized the People's Republic of China; abolished racial criteria from immigration policy;... banned all-white South African sporting teams; conceded land to the
Aboriginals; promoted equal pay for women; added contraceptives to the list of federally subsidized drugs; outlawed the killing of endangered species; announced plans for a free national health service; posted a government reward for the best national anthem to replace 'God Save the Queen'; and withdrew all Australian forces from Vietnam."

While these policies raised hackles in Washington, DC, business leaders were livid over Australia's new energy program. Whitlam's minister for minerals and energy was Reginald Francis Xavier Connor, nicknamed "The Strangler" for the time he'd grabbed a nosy reporter in a headlock.  In his new post, Connor oversaw the management of Australia's bounteous natural resources: iron ore, bauxite, lead, coal, nickel, copper, manganese, silver, tin, uranium, and, of course, oil.  Connor's vision was of a self-sufficient Australia, richer and stronger than the United States, applying modern technology to the country's untapped resources.  More importantly, he advocated 100 percent Australian ownership of his nation's fuels and minerals, including oil and gas, a proposal that curried no favor in the boardrooms of multinational corporations.  "The Labour government," Kendrick said, "made it impossible for anyone other than Australians to explore for oil and gas.  And so all of the American companies pulled out and even the Australian companies dropped their leases.  They just made it impossible.  With the taxation and rules and regulations, etc., no one could possibly operate
under the political climate at that time."

As the Labour government's term in office wore on, investment from the United States, Europe, and Japan evaporated. While this was in part due to the worldwide recession of the period, Connor rightly assumed he was the target of an economic boycott. In 1975, faced with mounting inflation, unemployment, and popular discontent, Connor turned to his fellow cabinet ministers for the authority to raise the $4 billion he needed to regain control of Australia's economy and natural resources, or as he put it, "buy back the farm." Connor's plan was approved, and within weeks he
was introduced to a middle-aged Pakistani commodities dealer who claimed he could obtain the loans for Connor at extremely attractive rates. What Connor didn't know, but should have, was that the commodities trader, Tirath Khemlani, was a well-known hustler with a long history of shady associations.  As details of the loan arrangements and Khemlani's ties to international arms traffickers dribbled out, Connor was forced from office.

With the Labour government still reeling from the scandal, a coalition of conservative parties huddled with their lawyers to discuss plans for ridding themselves of Whitlam and his policies once and for all.  Upon close scrutiny of the Australian constitution, the conservatives reasoned that the governor general, a representative to the queen of England, could, at least in theory, dismiss and entire government with the stroke of a pen. All that was needed, they argued, was the appropriate crisis.
The "Loans Affair," as it became known, was made to order.

The office of governor general is a formal relic from Australia's colonial past.  The post was entirely nominal, appointed by the prime minister and traditionally filled by an elder statesman, whose primary responsibilities included attendance at the funerals of foreign dignitaries and state balls. But the governor general is also tasked with "advising" the queen to commission the leader of the ruling party as prime minister. The queen, of course, never declines.  But what, the conservatives wondered, would happen if the governing party were unable to pass its annual budget?  Could the governor general then declare them unable to rule and install the opposition party as a caretaker government in their place?  The conservatives believed he could, and set about putting their plan in motion.  Citing the Loans Affair as evidence of mismanagement, the conservatives blocked the Labour budget proposal.  Before the Labour government could act, Governor General Sir John Kerr canceled Whitlam's commission.  Thus for the first time in modern Australian history, a "queen's representative" had dismissed a constitutionally elected national government in what has become known as "the Constitutional Coup."  Although an election was held several weeks later, Whitlam's supporters were apparently not prepared to wage a constitutional revolution, as the conservatives were swept into office.

MEANWHILE, BACK IN THE STATES

Labour's defeat was good news indeed for Phil Kendrick. "When the conservative government won the election," he said, "they then changed all the rules and regulations and laws and made it attractive to acquired acreage [for exploration].  If that hadn't happened, nobody ever could have gone back in there. That was crucial."

In this newly attractive business climate, Kendrick began looking for Australian investments. He eventually discovered a small Canadian firm known as Coral Reef Petroleum, Inc., which, through its subsidiary Earth Energy, Inc., owned the prospecting rights to approximately 35 million acres of Australian oil and gas lands. Kendrick jumped at the opportunity and Harken purchased the companies in exchange for stock, along with their Australian assets. By the time the deal was completed a year later, Harken, in conjunction with a consortium of companies headed by Esso Exploration and Production Australia, Inc., a subsidiary of Exxon Corporation, controlled the exploration rights to nearly 50 million acres of prime oil and gas drilling territory in Queensland, Australia.

By 1983, there were 13 discoveries made on Harken's Australian properties.  Before production began and the money started rolling in, however, Kendrick and Mulligan sold their interest in Harken to a group of East Coast investors with virtually no experience in the oil business. 

Uncomfortable with the notion of a wildcat prospect half a world away, Harken's new owners sold the company's Australian holdings for the security of a sure thing. "As I recall," Kendrick said, "they sold our Australian subsidiary for $4 million cash. So that turned out to be profitable, but not nearly as profitable as it would have been if they'd kept the property. There's now a tremendous amount of production on those properties."

Harken and its investors, no doubt, believed they had simply capitalized on an attractive business venture. Whether they realized it or not, however, they had been the beneficiaries of an intelligence operation perpetrated against the Australian government....

When Harry Mulligan and Phil Kendrick sold their stake in Harken in 1983, they were bought out by a group of investors headed by New York attorney Alan G. Quasha. Quasha, a partner in the firm of Quasha Wessely & Schneider, shelled out $250,000 for 100,000 shares of the company. The remaining 10 investors, including Quasha's brother, Wayne, a member of their father's Philippines law firm, paid $775,000 for 310,000 shares. Kendrick, however, recalls being perplexed by the deal. "I never could understand why Alan Quasha wanted to buy an oil and gas company at a time when he knew nothing about oil and gas and especially at a time when everything was beginning to go downhill and fall apart," Kendrick said. It was not the last time Kendrick would be surprised....

Curious as Quasha's activities may have been, individuals whom he brought to Harken have also raised eyebrows. Quasha, who now sits on Harken's board, is also a director of North American Resources, Ltd. (NAR), a British Virgin Islands company and Harken's second-largest stockholder. According to Harken's proxy statement, NAR is a partnership between the Quasha family and the Richemont Group Limited, a publicly traded Swiss company controlled by South African billionaire Anthony E. "Anton" Rupert. Rupert, through his companies, Richemont and the South African-based Rembrandt Group, controls such well-known enterprises as Rothmans International, manufacturers of Dunhill cigarettes, luxury-jewelry retailer Cartier International, and MontBlanc pens.

NAR is also the parent company of Intercontinental Mining and Resources Limited (IMR), another major Harken stockholder. IMR "and its affiliates" also own large stakes in two Harken subsidiaries, according to Harken's proxy.

Quasha's most interesting affiliation, however, is not financial but familial. Quasha's father, William Howard Quasha, is a powerful Philippines attorney with some interesting associations of his own. The senior Quasha, the only U.S. attorney licensed to practice in the Philippines, has numerous ties to individuals involved in Australia's infamous Nugan Hand Bank, an institution utilized by CIA officers Theodore Shackley and Thomas Clines of Iran-contra fame, along with their subordinate Edwin Wilson (who is currently imprisoned for selling plastic explosives to Libya), to fund a variety of covert operations, including the destabilization of Gough Whitlam's Labour government in 1975.

Australian government investigations during the late 1970s and early 1980s also revealed Nugan Hand's involvement in gun running, drug-money laundering, and close ties to the U.S. military and intelligence communities. The scandal-ridden bank collapsed in June 1980, six months after its co-founder, Frank Nugan, was found shot to death in his Mercedes Benz 90 miles outside of Sydney. Found on Nugan's body was the calling card of his attorney--former CIA director William Colby.

In April 1980, as Australian government investigators closed in on Nugan Hand, the co-administrators of the bank's Manila offices, U.S. Gen. LeRoy J. Manor and British subject Wilfred Gregory, turned to their lawyer, William Quasha, for advice. In addition to his duties with Nugan Hand, Manor was chief of staff for the U.S. Pacific Command and the U.S. government liaison with Philippine dictator Ferdinand Marcos. Gregory was Nugan Hand's original representative in the Philippines and a personal friend of Marcos's brother-in-law, Ludwig Peter Rocka, whose family deposited $3.5 million in the bank. Gregory has stated that Manor's decision to flee to the Philippines to avoid imprisonment was inspired by a conversation with Quasha. Gregory says Quasha "arranged for Manor to leave the country," according to The Crimes of Patriots. "He told me to go too. He said, 'You could wind up in jail.' "

Manor, however, denies ever receiving legal counsel from Quasha. He says he knew Quasha only through their work with the Boy Scouts of America. "I didn't deal with him in that regard,
professionally," Manor told the Texas Observer. "I knew him in the Scouts and I knew him somewhat socially." Quasha, however, acknowledges counseling both Manor AND Gregory, but says that
attorney-client privilege prevents him from saying whether he told them they faced possible imprisonment, or whether he advised Manor to leave the Philippines. "[Gen. Manor] had a problem here and I handled his work," Quasha said. "I don't discuss clients' business."


What Quasha WILL discuss is that he had additional dealings with Gregory. "I did a little emigration work for [him]," Quasha said. "Now that may have been paid for by the firm [Nugan Hand], but I billed him."

William Quasha's ties to Nugan Hand do not end there, however. The bank's president, retired Adm. Earl "Bud" Yates, says he met Quasha on "maybe two occasions" during social functions in the Philippines. Although Yates cannot recall who introduced them, Quasha says it was Gen. Manor. Quasha also says he was introduced to Nugan Hand cofounder Frank Nugan. "I met him at a social affair as well," Quasha said. Asked whether Frank Nugan had been involved in his meeting with Yates, Quasha replied, "I'm not prepared to say."

Even more intriguingly, the Thailand offices of William Quasha's law firm, Quasha Asperilla Ancheta Pena & Nolasco, are in the same Bangkok building that Nugan Hand occupied. In fact, when the bank held a gathering of its newly expanded staff in January 1978, the chosen venue for the three-day affair was this same Dusit Thani Building. Quasha says he was unaware of the bank's presence in the building. "We have had an office in Bangkok since that building was erected," Quasha said. "That was 23 years ago and there are many, many tenants in that building. I never even knew that that company that you mentioned [Nugan Hand] had an office in that building."

Quasha insists that he never had any dealings with Nugan Hand directly. "I'm not at liberty to tell you why, but it would have represented a conflict of interest," he said. "I represent an insurance company that had a claim against them [Nugan Hand]. I'm not prepared to give details, but it would have precluded, in any event, my ever representing them." Asked why this conflict did not prevent him from counseling either Manor or Gregory, Quasha replied: "My counselling of Gen. Manor and Mr. Gregory were regarded as personal. I did not see this [as] a conflict of interest. Besides, I had started advising them before I learned about this conflict between our client and Nugan."

In a 1982 interview with the Wall Street Journal, William Quasha's client, Wilf Gregory, called Philippine dictator Ferdinand Marcos "the best thing that ever happened to the Philippines since it was discovered by the Spanish.... The Marcoses are bringing the simple things to people that you and I take for granted." Although not quite as blunt about it, Quasha has also expressed his admiration and support for Marcos.

At the height of the "People's Power" revolution that eventually toppled Marcos and his bloody regime in early 1986, Quasha and his American business associates in the Philippines were getting edgy. "What we worried about, and it has come to pass, were two things," Quasha said.  "Number one was the loss of American bases.  We knew that as long as Marcos was there the bases were safe.  And the second thing we worried about was the growth of communism in the Philippines."  Quasha feared that if presidential candidate Corazon Aquino took power, "we'd have trouble with the communists. It was the opinion of all responsible Americans in the American Chamber of Commerce," Quasha
said.


When Marcos was openly accused of stealing the election, Quasha fired off a telegram to Republican Congressperson Dan Burton of Indiana, urging the United States not to intervene on Aquino's behalf. Calling the election "the least dishonest and least bloody" since the independence of the Philippines, Quasha warned Congress against prejudging the situation based on the "spate of distorted reports" in the media. Quasha also indicated that at least 40 U.S. business people in Manila, including the
Philippine head of Proctor & Gamble, shared his view. Burton later read the cable on the floor of the House, stating that in two days time, Quasha and his U.S. business associates would produce evidence of as many as 50 cases of alleged vote fraud perpetrated by the Aquino forces.


When new of Quasha's telegram reached the Philippines, it sparked a rash of angry denials.  The Philippines branch of the American Chamber of Commerce issued a public disavowal of Quasha
and his views. "The American Chamber of Commerce of the Philippines, representing some 500 members, unequivocally disassociates the chamber from the statements of attorney William H. Quasha, as reported in the press, regarding the recent elections," the Chamber wrote in a public statement that appeared in the Manila press. "The AMCHAM board deplores the partisan approach taken by attorney Quasha, which is contrary to AMCHAM policy. The AMCHAM board has no knowledge of 40 chamber members supporting Quasha's views."


Quasha, however, insists that the chamber sanctioned the cable from the beginning. "I had signed the thing, but it was not anything to do with trying to influence public opinion in the Philippines," Quasha said. "It was sent at the request of the American Chamber of Commerce." According to Quasha, the chamber only backed away from the statements when the negative consequences of their pro-Marcos stand became apparent. "These guys got all excited because their names were in the paper," Quasha said. "The head of Proctor & Gamble had a hemorrhage because he thought that Cory [Aquino] would boycott his company."

"We had information that there was funny business on both sides of [the election]," Quasha said.  "They [Aquino's supporters] had agents out buying votes.... What we wanted was for America to keep her hands off this election, which she had no business involving herself in."

The controversy eventually became serious enough that it caught the attention of the U.S. government.  On the day the chamber's denouncement of Quasha appeared in the press, an unidentified U.S. embassy official contacted Washington, DC. In a now-declassified State Department memorandum, the unidentified embassy official stated, "The Quasha letter is a wildcard thrown out on the table by men whose lives and fortunes revolve on relationships with the Marcos government."

That view was substantiated a few days later when the debate spilled over into Congress.  During a session of the House Subcommittee on Asian and Pacific Affairs, Rep. Burton reiterated Quasha's remarks.  That, according to Stanley Roth, staff director of the subcommittee, sparked a lively exchange between Burton and the subcommittee's chair, New York Democrat Stephen Solarz.
"He [Quasha] was one of the only pro-Marcos voices heard during the People's Power revolution," Roth said. "It got into a little flap at our hearing because we found out that this guy worked at
a law firm that included [the] Marcos [family]. So we pointed out that this guy wasn't exactly a neutral person."


In fact, listed as a member of Quasha's firm is one "Mariano P. Marcos (1937-1985)," exactly the same name as Ferdinand Marcos's father, a lawyer, who was stoned to death during World War II for collaborating with the Japanese. Quasha says the Mariano P. Marcos in his firm died in 1985 and "was no relation to President Marcos," although he lived on Mariano P. Marcos Street in metro Manila. Quasha calls this "very, very coincidental."

Although Quasha contends that he "was not benefited in any way during Marcos's time," he openly admits his admiration for the Philippine dictator. "In all, Marcos was never unkind to me personally," Quasha said. "Whenever I went to see him on behalf of a client...he was quite friendly.  And I liked his man-to-man approach.... We had respect for each other."

Even Quasha, however, grudgingly acknowledges Marcos's transgressions. "Now, of course, we see what a crook he was," Quasha said, "but it was not evident to the public eye [at the time].  Even after all this time, five years, they still have not proven it. But certainly there's a lot of evidence that he was robbing the country."

THE SWISS CONNECTION     

Further evidence of Marcos's malfeasance surfaced recently when a Philippine official announced that the former dictator's body could be allowed into the country for burial in exchange for $5 billion in gold allegedly stolen from the nation and hidden in a Swiss bank.  David Castro, chair of a presidential commission charged with recovering funds Marcos allegedly stole from the Filipino people, said the gold could be used as evidence of Marcos wrongdoing during his 20-year-old rule, according to the Los Angeles Times.  Castro said Marcos deposited the gold, 325 tons, at the Union Bank of Switzerland.  The bank denies the claim, according to the Times.

Union Bank is an institution with which Harken is well acquainted.  In 1987, Harken unveiled a $25-million stock offering through the securities firm of Stephens, Inc. of Little Rock, Arkansas. Stephens placed the stock with a Union Bank subsidiary in London.  In October 1988, Business Week reported that Union Bank held a 5.5 percent stake in Harken.  The bank later sold its Harken shares to a wealthy Saudi Arabian businessperson, Abdullah Taha Bakhsh, who is now the company's third largest stockholder.

But Union Bank's name also turned up in Australia's Constitutional Coup in 1975. The Loans Affair that brought down the Whitlam government first erupted when a package of fake documents used to start the scandal was sent off with a cover letter on Union Bank letterhead. "By the time the opposition parliamentarians who received the package had turned its contents over to the press, the signature had been torn off the letter," according to The Crimes of Patriots. "Even though the documents were later exposed as bogus, their publication helped weaken and ultimately destroy the Whitlam government."

Union Bank's connection to Nugan Hand is not limited to the 1987 stock purchase. Bernie Houghton, a secretive Texan described in The Crimes of Patriots as "the mystery man of Nugan Hand [and] perhaps its most important figure," was well acquainted with a traveling Union Bank official. Houghton, who may actually have introduced Nugan Hand cofounder Frank Nugan to his future partner, Green Beret war hero and CIA operative Michael Jon Hand, introduced the Union Bank official to Nugan Hand representatives in Asia, according to The Crimes of Patriots.

Frank Nugan himself also had dealings with Union Bank. After Nugan was found shot to death in his car in January 1980, it was discovered that he had forged the signature of New South Wales attorney general Frank Walker on a letter to Union Bank, opening an account in Walker's name. At the time, Walker was directing criminal fraud proceedings against Nugan and his brother Ken (who was also charged with obstruction of justice and embezzlement) for their role in a stock scandal involving the
family fruit business. "The only reason for writing such a letter," according to The Crimes of Patriots, "would be to try to frame Walker, to embarrass or blackmail him. But Walker says he
never heard about it until the letter was found after Nugan's death."


Union Bank was also identified in congressional testimony as one of several institutions that deliberately skirted Panamanian guidelines aimed at curbing drug-money laundering.  In an effort
to reduce this illegal laundering activity, the Panamanian Bankers' Association in 1984 proposed a voluntary $5 million limit on the amount of U.S. currency that any one bank could return to Panama.  But in a deposition before the House Subcommittee on Terrorism, Narcotics and International Operations in 1988, Amjad Awan, the former manager of the infamous Bank of Credit and Commerce International (BCCI) and deposed Panamanian dictator Gen. Manuel Noriega's personal banker, stated Union Bank and other Swiss banks deliberately avoided compliance with the restrictions by chartering aircraft to fly currency out of the country.


Several key Harken figures also have ties to Union Bank. William Quasha's son, Alan, who sits on Harken's board, is also the chair of Frontier Oil and Refining Co. of Denver, Colorado, where Harken President Mikel Faulkner is a director.  Frontier is controlled by Anton Rupert, the Quasha family's partner in Harken.  When Rupert acquired Frontier in a leveraged buyout in 1988, he announced an $85 million "revolving credit facility" with Union Bank of Switzerland, replacing all of the refiner's
previous "working capital facilities," according to National Petroleum News.


Faulkner told the Texas Observer he was unaware of Union Bank's connections to Nugan Hand.  "No, I didn't know that," Faulkner said. Alan Quasha did not return repeated phone calls. Anton Rupert did not respond to the Observer's request for an interview.

SLICK DEAL

When Harken's $25 million stock offering was placed with Union Bank in 1987, the transaction was handled by brothers David and Mike Edwards, account managers with Stephens, Inc. (David Edwards had made headlines in the late 1970s, when he blew the whistle on irregular foreign currency transactions at Citibank in New York.) After leaving Stephens and starting an investment
firm with his brother, David Edwards played a key role in landing the Bahrain deal for Harken.


In April 1989, Bahrain was looking for a company to explore its offshore acreage. They employed the services of Michael Ameen, the American-born son of Arab immigrants, who spent 22 years with the Arab American Oil Co. (Aramco), the world's largest petroleum outfit, and 13 years running Mobil Oil's Middle East operations.  Edwards, an old friend of Ameen's, put him in touch with Harken. After months of negotiations, Harken signed a production-sharing agreement with Bahrain in January 1990. The deal gives Harken the exclusive exploration, development, production, transportation, and marketing rights to most of Bahrain's offshore oil and gas reserves.  The territories covered by the pact lie sandwiched between the world's largest oil field, off the shore of Saudi Arabia, and one of the biggest natural gas fields, off the shore of Qatar.  Bass Enterprises Production Co., the oil and gas exploration and development arm of the Fort Worth's billionaire Bass family, will finance Harken's Bahrain venture in exchange for a cut of the profits.

At the time the deal was announced, oil industry analysts marveled at how this virtually anonymous company had landed such a potentially valuable concession.  "This is an incredible deal, unbelievable for this small company," Charles Strain, a Houston energy analyst told Forbes magazine last September.  Forbes, however, failed to point out Harken's powerful political connections. Notably absent from the article was any reference to President Bush's eldest son, George W. Bush Jr., who sits on Harken's board of directors and is a $50,000-a-year "consultant" to the company's chief executive officer. Bush, who is the managing general partner of the Texas Rangers baseball club and frequently mentioned as a future candidate for statewide office, also holds roughly $400,000 in Harken stock. 

BEATING AROUND THE BUSH

George W. Bush Jr.'s involvement in Harken first came under scrutiny last October when Houston Post investigative reporter Pete Brewton discovered that the President's son had sold off much of his Harken stock just weeks before Iraq's invasion of Kuwait on August 2, 1990. Within days of the invasion, the value of Harken shares dropped dramatically, primarily due to fears that a war would jeopardize the company's agreement with Bahrain. Even armed with the knowledge of the Bush's transaction, however, Brewton could find no record of it on file with the Securities and Exchange Commission (SEC).

The mystery of the missing documents was finally resolved on April 4, 1991, when the Wall Street Journal reported that Bush had failed to report the "insider" stock sale until March of this year, nearly eight months after the federal deadline for disclosing such transactions. According to the Journal, documents filed with the SEC indicate that on June 22, 1990, Bush sold 212,140 shares of his Harken stock for $4 per share. The sale represented 66 percent of Bush's holdings in the company and raised
$848,560.


Bush sold his Harken shares at near top market value. Just one week after Iraqi troops marched into Kuwait, for example, Harken traded for just $3.03 per share, down nearly 25 percent from the price Bush received for his shares seven weeks earlier.  Until recently, Harken had been trading for around $4 per share and had dropped as low a $1.12 during the past year. Over the past several weeks, Harken's stock has fluctuated wildly, hitting an all-time high of $8.75 on July 28, before settling back to a more realistic $6.63 the following day. Analysts attribute the sudden price surge to Harken's plans to begin drilling its first well in Bahrain in October.

Under SEC regulations, Bush should have reported the sale of his Harken holdings by July 10, 1990. According to the Journal, however, Bush did not disclose the transaction until the first week of March 1991. In the past, the SEC has mounted civil suits against flagrant violators of insider-trading rules, but such actions are uncommon. "The commission can take a variety of actions in cases in which SEC filing rules are not complied with," said Mary McCue, director of the SEC's Office of Public
Affairs. "I don't want to speculate on actions because each case is analyzed individually.... In fact, we neither confirm nor deny that investigations are underway."


President Bush did not return the Observer's phone calls. The White House press office said it had "nothing to share" on the matter.

OIL'S WELL THAT ENDS WELL


On a visit to Australia in 1982, former CIA director and then vice president George Bush gave Labour Party leaders his personal assurance that the CIA was not involved in either the Nugan Hand Bank scandal or the destabilization of Gough Whitlam's government. But this was purely subterfuge, for the CIA clearly DID engage in operations designed to alter the course of Australia's domestic affairs, as it has so many times, in so many countries, to the benefit of so many multinationals--including Harken.

But this should come as no surprise, really, for U.S. foreign policy is driven by the interests of these multinationals. The fact that Harken and its high-powered associates, for example, profited from the CIA's activities in Australia, American support for Marcos in the Philippines, and George Bush's
recent war in the Middle East, is not exceptional. It is merely a crystalline example of the interrelation between U.S. corporate and political interests. For Harken, unfortunately, is not the
exception, but the rule.


Texas Observer intern Tracy Shuford provided research assistance for this story.

 * The Bass Brothers fortune dates back to Sid Williams Richardson, an oilman and rancher born in 1891. Mr. Richardson was a lifelong bachelor whose closest relative and sometime business partner was his only nephew, Perry Bass

When Mr. Richardson died in 1959, Perry Bass maintained a share of his companies, and each of Perry's four sons [Sid, Lee, Ed and Robert] inherited $2.8 million. In 1960, the sons combined their assets to form Bass Brothers Enterprises. 

Perry Richardson Bass's wife, Nancy, is also deceased. 

Another blog related to Quixotic Joust contains an article written by the same author, Linda Minor about the Sid Richardson's influence in Texas as well as national politics. See "Wealth--Vassal to Power."

Saturday, March 4, 2017

Who is Robert Mercer ... Really?


We interrupt whatever trains of thought this blog has previously been following to report on what is actually happening today in the USA. Donald J. Trump became President of the United States on January 20, 2017 after a so-called election the previous November.

Renaissance Technologies, Inc.

Trump's chief donor, Robert Mercer, began funding him "hugely" after Mercer's original favorite, Ted Cruz, dropped out of the race in July without endorsing the nominee at the Republican convention. Since then, investigative journalists have attempted to learn who this mysterious billionaire really is.

Mercer, "had a short but notable career in computer science [as a] brilliant programmer, [who] had played a significant role in developing early language processing algorithms at IBM," before 1993, when he was hired by the venture capital firm created by his predecessors at Renaissance Technologies. At Renaissance, we are told by Open Secrets, Mercer then "rose through the fund’s ranks, and was appointed co-CEO when Simons retired from the position in 2009."

Thomas Turner Mercer in 1943
Robert Mercer's grandfather was Albert Alexander Mercer, born in Blackburn, Lancashire, England, in 1884. He relocated to British Columbia with his brother, John William Mercer, before 1911, the year Albert met and married Anna Lavinia Rogers, whose American-born parents had settled in Victoria in 1908. After her mother died in 1928, the families began making their way back to the United States, where Anna's brother, Felix A. Rogers, had been working in the lumbering industry at Port Angeles, between Tacoma and Bellingham, Washington. 

Albert, who had been trained in pattern making and foundry work in England, left Victoria for Tacoma, Washington with his wife and children, including Robert's father, Thomas Turner Mercer, then nine years old, who had been born in British Columbia in 1920.


In 1942 Thomas married Virginia Mae Kidd, joined the Army Air Corps at Tacoma, and the following year filed a petition to become a U.S. citizen in Arizona where he was stationed (see inset document to the right and obituary).

After the war, Thomas and Virginia moved to California, where he obtained a bachelor's degree at San Jose State University near Santa Clara, some 30 miles south of Stanford University at Palo Alto. He worked as a bookkeeper for CB Hay Co., a bean threshing manufacturer during his studies at San Jose. 

The title of "health physicist" was listed with his name while he was at the University of Washington at Seattle in 1954, and the address he gave for the directory--4094 Union Bay Circle--takes us on google maps to the Douglas Research Conservatory, which today is within an isolated and fenced-off area of the campus, where the Society for Ecological Restoration meets. That building was named for Howard Douglas, a microbiologist studying the genetics of yeast, who curiously took sabbaticals in Paris in the mid-1950s with another professor, Herschel Roman. to study the effects of yeast. Yeast? As in the yeast that poisoned the village of Pont St. Esprit near Paris in 1951? Hank P. Albarelli Jr. wrote a book about that incident, and others, in which the Central Intelligence Agency has been incriminated:
The same scientists confirmed that following the Pont St. Esprit experiment, Fort Detrick’s Special Operations Division returned to New York City in 1956 to conduct experiments under Operations Big City and Mad Hatter. These were covert projects that involved the aerosol spraying of chemicals through the exhaust pipe of an automobile that was driven by CIA and Army scientists around New York City. Prior to this, in 1952 and 1953, smaller experiments were conducted within New York subway cars by George Hunter White, a Federal Bureau of Narcotics agent who secretly worked as a contractor for the CIA. On at least two occasions, White detonated specially devised aerosol devices filled with LSD. The CIA destroyed White’s written reports covering these experiments in 1973. [emphasis added]
The Mercers
I italicized the words in the above paragraph to emphasize the fact that Robert Mercer's father, Thomas Turner Mercer, was a graduate student in this department in the same years these "sabbaticals" occurred. Mercer had come to Seattle following his undergraduate studies in biology and chemistry at San Jose State. Once he received his bachelor's degree, Mercer moved to Seattle, where he had a position in this same department until 1955, where he became an expert in the field of aerosol physics!

What is going on here? We are talking about Dr. Thomas Turner Mercer, whose son, Robert (Renaissance Technologies) Mercer, billionaire, has been the largest donor of two different Republican candidates in the last election:
  • Ted Cruz, who told us "Climate change is not science. It's religion."
  • Donald Trump, now President, who as I write seeks to "slash one of the government's premier climate science agencies by 17 percent."
The Department of Energy has been funding studies on the environment for decades through grants to various universities listed in a 96-page document called "Transfer Abstracts of Fossil Fuel Related Health and Environmental Effects Research Projects (1979)" which includes the University of Washington in Seattle, the University of Rochester where Mercer obtained his PhD and taught, as well as the Lovelace Foundation, where he worked at the time his son Robert was a National Merit Scholarship student at Sandia High School near Albuquerque. Yet these government-funded studies appear to be attempting to transfer the benefits gained into private industry rather than return them back to the taxpayers who paid for the research.

Report written by Dr. Thomas Mercer
Robert Mercer no doubt acquired an interest in this subject from Dr. T. T. Mercer, who spent his career studying aerosol physics as evidenced by the following:
  • "A study of some physical properties of an aerosol in relation to airborne decay products of radon" / by Thomas T. Mercer, published in Washington, D.C. by Office of Technical Services, Department of Commerce, 1957, completed: 11/8/56. An additional note states he was paid through a grant from "U.S. Atomic Energy Commission and the University of Rochester, administered by the Department of Radiation Biology of the School of Medicine and Dentistry." A research study on the toxicity of radon when inhaled, it was part of his PhD dissertation.
  • "Charging and precipitation characteristics of sub-micron particles in the Rohmann electrostatic particle separator," completed: 11/8/56 / by Thomas T. Mercer. Published by the same source in 1957, this study is too complicated for me to even categorize.
  • "Atmospheric monitoring for alpha emitters using molecular Filter Membranes," by Thomas T. Mercer - 1/4/54 - involves a research study of uranium and plutonium.
  • Similar studies published by Mercer in 1972 and 1973
  • Thomas T. Mercer Joint Prize of the International Society for Aerosols in Medicine and the American Association for Aerosol Research, for Excellence in Pharmaceutical Aerosols and Inhalable Materials is an annual prize created in 1995. 
  • List of additional works by Thomas Mercer and others
Stephen K. Bannon

Robert Mercer invested $10 million in Breitbart, according to an anonymous source cited by Bloomberg, which also says Mercer put $11 million into Cruz's campaign. Bloomberg created an instructive chart showing the people and entities Mercer has been supporting, making him the man who has replaced Richard Mellon Scaife as the chief funder of the "vast right-wing conspiracy" machine.

Breitbart recently published a piece by James Delingpole, encouraging Trump to remain steadfast against anyone (the "Green Blob," he calls it) who claims climate change is manmade.

What this leads us to is the project Stephen Bannon worked on for a time in California and Arizona called the Biosphere II, sponsored by Edwin Perry Bass, which we will explore subsequently.


Wednesday, January 25, 2017

How Land Investment in Florida Helped Develop Pan Am Airways

Bebe's Girl, Clare Gunn Rebozo Babcock Gentry


As we explored in Part 1 of Bebe the Bagman, Bebe Rebozo and Clare Margaret Gunn were classmates at Miami High School before Bebe graduated in 1930. They  sneaked off to Fort Lauderdale during Clare’s senior year and were secretly married July 31, 1931. Writing in a style characteristic of Kitty Kelley, Clay Drewry Blair, Jr., disclosed this intriguing tidbit of information in his feature article called “Bebe Rebozo’s Life Story,” which was serialized in newspapers in 1970 (posted previously at QJ).

Clay Blair, who dealt routinely with subjects like atomic submarine warfare or the life of Admiral Rickover, even wrote a biography of James Earl Ray published only a year before  astounding readers with Rebozo's secret romance. Blair claimed that Clare wanted the marriage kept secret because her parents lived in "comfortable circumstances, many notches up the social ladder from Bebe." That conclusion on Blair's part was erroneous in several respects.

Gunn Family Circumstances Far from 'Comfortable'

The fact is that John and Nellie (Ellen) Gunn actually divorced around 1929, making Clare's living situation quite unstable. The real estate and construction boom had all but disappeared in the wake of Miami's 1926 hurricane, making it difficult for her father to find enough work to support his family. The depression further deepened with the 1929 stock market crash. These events took a heavy toll on the Gunns. Clare's older brother Donald, who was a friend of Bebe's, disappears from public records after 1932. 

It did not take Nellie long to marry for a second time. Cornelius William Scully, an Irish Catholic from New Jersey, was a fireman who lived at 104 NE 56th Street, about a mile from the home in which Clare had lived with her parents (145 NW 61st), since moving to Miami from St. Louis in 1924. With Donald and Clare almost out of high school when their parents divorced, it is possible Clare married Bebe in 1931 in order to stay in the house next-door to their uncle Hugh Gunn without adult supervision. From available data we can surmise that the divorce, remarriage and consequent living arrangement was by no means a "comfortable" situation for Clare or her siblings at the time she agreed to undergo a secret marriage with Bebe. If nothing else, the marriage would, however, have given her (still legally a minor) the legal capacity to enter into a lease agreement.

After the divorce their father lived in a room at 161 NW 52nd Street, a house rented by the Henry Semple family. Semple drove a truck for Gunn & Goll, a construction firm owned by Clare's uncle William in partnership with a war veteran named Otto H. Goll from Toledo. In 1933 her father  also went to work as Gunn & Goll's "caretaker." There was no other obvious relationship between John Gunn and Semple; however, John remained at this address for many years. Far from "comfortable," this situation was must have been downright embarrassing for young Clare.

What is most intriguing about this company (Gunn & Goll) is that in the midst of economic recession, Otto Goll could afford to travel constantly, flying frequently to Cuba by seaplane. His flights which began in the 1930's continued into the next decade via Pan American Airways. Pan Am was, of course, the airline for which Bebe and Clare's husband, James Norman Gentry, were at one time employed. Bebe Rebozo's real link America's first international airline, which was so much in the news throughout the 1930's depression years, will take some time to explain.

Clare worked as a steno in 1934.
While Clare was secretly married to Bebe, her name showed up in Miami's 1933 city directory, indicating that she was employed at Progressive Investment Corporation, an entity with no listing in the directory. The following year's listing, however, indicates she lived with her mother and stepfather at Scully's house on 56th Street, while working as a stenographer. Her youngest brother, William P. Gunn, who may not have gotten along with his new stepfather, lived with their father in his rented room in the Semple home. By 1937, however, Clare had moved out on her own to 244 NW 52nd, where William P. joined her. This new living arrangement could not have lasted long, as Clare also married again in 1937, as we will explore subsequently.

Clare's Employment

Excerpt from The Scroll, 1942
Though we find nothing to indicate who the principals were in Progressive Investment Corporation, it is easy to discern that her next job in 1934 for a statistical research firm called Ballinger & Taylor involved John Kenneth Ballinger, associate editor at the Miami Herald, and Frank O. Taylor, Jr., an accountant. 

After Ballinger wrote, but was unable to get his book published, he teamed up with Taylor to write Florida bonds: a summary of the funded public debt of December 31, 1934. In 1936 he self-published his first book with the title  Miami Millions, only a year or two after Harvey O'Conner's Mellon's Millions hit bookstores. He may have thought the catchy title alone would have made his chronicle of unconnected tidbits of factual data, without the analysis which had made O'Conner's book worthwhile, a bestseller. The news item announcing his service in WWII in his alumni magazine (upper left) unfortunately mentioned the wrong book. Boom in Paradise had been published by T. H. Weigall in 1932, and can be read at the Everglades website.

According to his 1980 obituary, Ballinger went into the Army Air Corps as a captain in 1942, coming out as a colonel before getting a law degree. While Clare worked for Ballinger a decade earlier, he and his wife lived at 637 Minorca Avenue in Coral Gables, only a few doors down from

Where Was Bebe in 1934?

Bebe's parents and working siblings, during his high school years, lived in Miami at 183 NW 34th Terrace, a mile to the south from the Gunns. Although Bebe was said by the book, Bebe the Bagman, to have quit his Pan Am job in 1931, Miami directory indicates in 1934 that he was still employed as a steward at Pan American Airways, only a few months after the airline's owner, Juan Trippe, had made the cover of Time magazine. The Rebozos moved in 1934 to 836 NW 33rd Avenue, still less than two miles from any of the homes where Clare lived, but in a sightly more upscale neighborhood than hers.


According to Blair's unsourced Bebe the Bagman, Bebe had been among the first stewards hired by Pan Am but quit the job in 1931 to pump gas for a year, before he
Page from 1934 Miami directory
"took a job chauffeuring tourists around the Gold Coast. Living frugally and saving his money, restless and always looking for a better chance, in 1935 he invested his savings in 'Rebozo's Service Station and Auto Supplies,' specializing in the sale of retreaded tires."  
Blair apparently borrowed that unattributed detail from a cover article, "President Nixon's Best Friend," in the July 31, 1970 issue of Life Magazine under the byline of Colin Leinster, a Life writer/photographer who, in the late 1960s had been assigned both to Life's Hong Kong and Vietnam bureaus before his promotion to Assistant Editor in 1969. Leinster's  promotion came less than a year before his feature on Bebe hit the Luce-owned magazine (Henry R. Luce, Yale 1920, Skull and Bones).

Were Blair and Leinster  unwittingly working for the same boss who was intent on pumping disinformation about Bebe's past into the mainstream media? A similar chronology of Bebe's life was, intriguingly, inserted into Anthony Summers' Arrogance of Power. We leave you to make your own conclusions after reading the following research with a questioning mind.

QJ is disinclined to buy either the Blair or Leinster account simply because the 1934 directory listing (inset, upper right) indicates Bebe was still a steward in 1934. The goal of the disinformation attempt  was to minimize Bebe's role at Pan Am and maximize his connection to Smathers. Why? The Pan Am Airport looms large in QJ's view. Possibly a windmill; more likely a giant!

Clare Gunn a/k/a Mrs. E. Vose Babcock, 1937-39

Bebe graduated from Miami High in 1930 and Clare two years later, though she had been on schedule to finish in 1931. (Note: Both of them would have known George Smathers, 1931 MHS senior class president, who was named Outstanding Athlete of Dade County that year. Smathers was attending college and law school in Gainesville from 1932-38, some of those years with Phil Graham and Paul Helliwell, as QJ has previously noted.)

While she worked for Kenneth Ballinger, Clare met E. Vose Babcock, Jr., the son of a lumber tycoon from Pittsburgh, who owned a large ranch in Charlotte and Lee Counties in western Florida, just to the south of Tampa. Today it is a three-hour drive from Miami along Interstate 75--but in the 1930's would possibly have taken much of the day. How and where Clare and Vose met may forever remain a mystery, along with the reason for their divorce two years later. We can only speculate about whether Bebe Rebozo had a hand in introducing them, possibly through his work at the Pan American airport based on Dinner Key. (Note: Other historic photographs can be viewed at Miami History website.

Vose Babcock at left with his wealthy family
We do know that Vose Babcock, Jr. had dropped out of Princeton after his second year and allegedly shunned his father's lumber business in 1932 in favor of raising cattle in the Fort Myers Beach area. He married Clare Gunn in 1937, three years after her marriage to Bebe was annulled. Mr. and Mrs. Babcock (Clare's name was misspelled as Claire) were listed in Fort Myers city directories for several years, and, although directories may have been slow to update details, something else seems amiss.

A cowboy, marrying a stenographer may not have sat well within the family, if they were aware of his marriage, but it appears not to have been enough of a departure from family decorum to have threatened the scion's enormous trust fund, which appears to have remained intact, as we shall later see. The Babcocks were close associates of the same Mellon family who were the subject of the scathing rebuke of the Secretary of the Treasury during Prohibition and early depression years. 

The title of the book, Mellon's Millions, likely served as a model for Ballinger's own book title, Miami Millions.

As members of Pittsburgh's Duquesne Club, Union Club, Country Club, as well as the Oakmont Country Club, the Babcock sons were sent to prestigious Ivy League schoolswith Vose Jr. prepping at Choate before attending Princeton in the class of 1927, while the parents enjoyed the same social circle as the Mellon family in Pittsburgh. In fact,





You can also read Part 2 of Bebe the Bagman, originally posted with the above research.